The Australian dollar pushed higher in overnight trade, benefiting from broad-based US dollar weakness and some amazing gains in bulk commodity futures in China.
After hitting a high of .7687 in US trade, the AUD/USD has flatlined since, currently sitting at .7683 at 7am AEDT, up 0.33% for the session.
The strength in the Aussie came despite continued nerves about next week’s US presidential election, along with another enormous slide in crude oil prices.
It was largely about US weakness, though, as seen in the Aussie’s mixed performance against the crosses:
- AUD/USD 0.7683 , 0.0025 , 0.33%
- AUD/JPY 79.05 , -0.05 , -0.06%
- AUD/CNH 5.2009 , 0.0189 , 0.36%
- AUD/EUR 0.6915 , 0.0015 , 0.22%
- AUD/GBP 0.6164 , -0.0057 , -0.92%
- AUD/NZD 1.0469 , -0.0031 , -0.30%
Looking ahead to Friday’s session in Asia, there’s going to be plenty of volatility around 11.30am AEDT when markets will receive the RBA’s quarterly statement on monetary policy (SOMP) along with Australian retail sales for September, along with quarterly volumes which feeds into household consumption in Australian GDP.
“The market consensus expects retail sales to have risen 0.4% m/m, the same pace of growth as the prior month while for the quarterly volume series which feeds into GDP,” said David de Garis, senior economist at the NAB.
“An increase of just 0.2% q/q is tipped, well below last quarter’s 0.4% increase. NAB expects somewhat softer monthly growth of 0.3% but a stronger 0.4% quarterly ‘real’ print.”
As for the SOMP, de Garis says that he’ll be watching the bank’s view on inflation, housing and the labour market, three key areas of focus detailed by RBA governor Lowe in a speech delivered last month.
“We do not expect to see any material change to GDP and inflation forecasts but we’ll be very interested in their outlook for commodity prices and the terms of trade as a support for the economy,” he said.
After that mini Australian-centric data deluge, markets will likely enter a slumber ahead of tonight’s US non-farm payrolls report for October that will arrive at 11.30pm AEDT.
Payrolls are expected to increase by 175,000, with the unemployment rate tipped to fall 0.1 percentage points to 4.9%.
Average weekly earnings are forecast to rise by 0.3% following a 0.2% gain in September.
In the absence of shock result, it’s likely that after the initial flurry in activity that always accompanies the report, market movements will likely be driven by speculation over the US election result later in the session.